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TWENTY-FIRST CENTURY FOX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
95
Cash flows from discontinued operations related to News Corp were as follows:
For the years ended June 30,
2014 2013 2012
(in millions)
N
et cash provided by operating activities from discontinued operations .......... $ 571 $ 506 $ 956
N
et cash used in investing activities from discontinued operations ................... - (1,674 ) (655)
N
et cash used in financing activities from discontinued operations .................. - (263 ) (13)
N
et increase (decrease) in cash and cash equivalents from discontinued
operations ......................................................................................................... $571 $ (1,431 ) $288
News Corp Transactions Prior to the Separation
Prior to the Separation, the Company’s former businesses that are now subsidiaries of News Corp entered into
the following transactions:
Fiscal 2013
Acquisitions
In July 2012, News Corp acquired Thomas Nelson, Inc., one of the leading Christian book publishers in the
U.S., for approximately $200 million in cash.
In November 2012, News Corp acquired Consolidated Media Holdings Ltd. (“CMH”), a media investment
company that operates in Australia, for approximately $2 billion in cash and assumed debt of approximately $235
million. CMH owned a 25% interest in Foxtel through its 50% interest in FOX SPORTS Australia. The acquisition
doubled News Corp’s stakes in FOX SPORTS Australia and Foxtel to 100% and 50%, respectively.
The carrying amount of the News Corp’s previously held equity interest in FOX SPORTS Australia, through
which News Corp held its indirect 25% interest in Foxtel, was revalued to fair value as of the acquisition date,
resulting in a non-taxable gain of approximately $1.2 billion which was included in Income (loss) from discontinued
operations, net of tax in the Consolidated Statement of Operations for the fiscal year ended June 30, 2013. The fair
value of News Corp’s previously held equity interest of $1.6 billion was determined using an income approach
(discounted cash flow analysis) adjusted to remove an assumed control premium. Significant unobservable inputs
utilized in the income approach valuation method were discount rates ranging from 9.5% to 10.5%, based on
weighted average cost of capital for FOX SPORTS Australia and Foxtel using the capital asset pricing model, and
long-term growth rates of approximately 2.5%, reflecting News Corp’s assessment of the long-term inflation rate for
Australia.
Dispositions
In March 2013, News Corp sold its 44% equity interest in SKY Network Television Ltd. for approximately
$675 million and recorded a gain of $321 million which was included in Income (loss) from discontinued
operations, net of tax in the Consolidated Statement of Operations for the fiscal year ended June 30, 2013.
News Corp Impairments
During the fourth quarter of fiscal 2013, as part of News Corp’s long-range planning process in preparation
for the distribution, News Corp adjusted its future outlook and related strategy principally with respect to its News
and Information Services business in Australia and secondarily with respect to its News and Information Services
businesses in the U.S. which resulted in a reduction in expected future cash flows. As a result, News Corp
determined that the fair value of these reporting units declined below their respective carrying values and recorded
an impairment charge of approximately $1.4 billion ($1.1 billion, net of tax) in the fiscal year ended June 30,
2013. The charges primarily consisted of a write-down of News Corp’s goodwill of $494 million, a write-down of
intangible assets (primarily newspaper mastheads) of $862 million, and a write-down of fixed assets of $46 million.